payrolling of benefits

Payrolling of benefits – Feeling the pain of collating your P11D data?

Rebecca Aimey
Written by Payroll Manager, Rebecca Aimey

Employers who would like to formally payroll benefits for the first time, must register with HMRC.


Some seven years ago, HMRC introduced the ability for employers to payroll certain benefits that are classed as a benefit in kind. This has enabled a change in the way employees are taxed in relation to any benefits in kind received from their employer.  Instead of paying the tax on these benefits in arrears at the end of the tax year via the submission of a P11D, payrolling the benefits means that employees pay the tax in real time in the month/year the benefit is received.


There are other advantages to the payrolling of benefits and they are as follows:


  • P11Ds no longer needed for employees
  • Reduces the risk of errors
  • Employees pay tax in real time
  • All benefits visible on employees’ payslips
  • No surprising tax codes issued the following year


At the end of the tax year the employer will still need to submit a P11DB to pay the Class 1A National Insurance but no P11Ds are needed for employees. The registration is currently voluntary and does require the employer to sign up to the scheme before the beginning of the new tax year, to ensure they can start payrolling benefits from the start of the new tax year.  If you are feeling the pain of collating your P11Ds, then make this the last time!


What next?

Gravita’s payroll team can take care of the HMRC registration process and guide you through the information required to ensure your payroll is set up to payroll benefits. Please contact Rebecca Aimey ( or please email for more information.

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